China's growing worldwide influence has caught the attention of many in recent years, with its expanding presence in several nations prompting concerns about its intentions and impacts. Chinese investments through loans to national governments in the Western Balkans reached over €32 billion from 2009 to today. The Balkans, a region historically influenced by major powers, is a place where China's influence is becoming increasingly apparent.
Infrastructure, Economy, and Investments
China's financial impact on this region has been fueled mostly by its involvement in the Belt and Road Initiative (BRI), which aims to improve connectivity and trade between China and the rest of the globe. Because of their strategic location at the crossroads of Europe and Asia, the Balkans have attracted Chinese investment in a variety of sectors.
Serbia, for example, has been the largest recipient of Chinese investments in the Balkans with more than €10.3 billion of loans and investments in total. Serbia's energy industry has received significant assistance from China, particularly in coal-fired power plants and renewable energy initiatives. For instance, the Kostolac coal-fired power plant, which was funded by a loan from China's Export-Import Bank, has greatly improved Serbia's energy production capacity. In 2016, China's Hesteel Group acquired the Smederevo steel factory, which marked the first direct Chinese investment in a major Serbian company.
![Serbian President Aleksandar Vucic (L) and Chinese President Xi Jinping (R) during Vucic's last visit to China. [EPA-EFE/KENZABURO FUKUHARA / POOL]](https://static.wixstatic.com/media/13893a_41878956f20045ccb81311ac5eab9d4d~mv2.jpg/v1/fill/w_800,h_533,al_c,q_85,enc_auto/13893a_41878956f20045ccb81311ac5eab9d4d~mv2.jpg)
This acquisition was seen as a relief for the Serbian government and the approximately 5,000 workers there, as it prevented substantial costs and the potential closure of the mill. This Chinese investment not only proved profitable but also had a significant social impact by preserving jobs and supporting the local economy in the Smederevo region, where the steel mill is the largest employer, ultimately leading to improving China's image among the Serbian public. Prior to this investment, Chinese companies in Serbia primarily focused on infrastructure projects financed through state-sponsored loans.
The development of the almost €1 billion Bar-Boljare highway, a critical infrastructure project that will improve transportation connectivity inside the nation and strengthen commercial ties with neighboring countries, demonstrates China's involvement in Montenegro. The initiative, which is being funded by a Chinese loan, has the potential to boost economic growth and regional integration. However, the construction took more than eight years and had many delays.
The construction of the road has resulted in Montenegro acquiring substantial debts to China, which exceed one-third of its annual state budget. This has raised concerns about the economic risks that Montenegro may face in the long run. Critics argue that the project is a clear demonstration of Chinese lending practices, which are often hasty and combined with local corruption.
After the elections in 2021 and the coming of a new government, Montenegro's Capital Investments Ministry gave the task of doing feasibility research to two companies in order to estimate whether or not the almost €1 billion loan investment is a good deal or not. One of the companies, Scott Wilson Group, a British consultancy agency, has said that the construction should cost €522 million, a little more than half of the current cost. Critics have said that China's Export-Import Bank and the last Montenegro government have been involved in corruption and doing deals that are not in favor of the state.
Since 2010, Montenegro has purchased numerous Chinese bulk carrier merchant ships to serve its maritime commercial and transport needs. Meanwhile, China has shown a persistent interest in the country's port infrastructure, inserting clauses in its loan deal that could allow it to seize parts of the port of Bar if Montenegro defaulted on its debt repayment obligations.
However, despite the controversy surrounding the projects, according to research done by the Center for Insights in Survey Research in 2020, 68% of Montenegrins find themselves favoring China and do not view it or the financial risks associated with the highway as a major worry even though the debt forced Montenegro's government to raise taxes, partially freeze public sector wages and end benefits for mothers in order to get its finances in order.
Another Chinese-funded critical infrastructure is the planned Budapest–Belgrade–Skopje–Athens railway, a Chinese-CEE hallmark project of Beijing's Belt and Road initiative, connecting the China-run Piraeus port in Greece with the heart of Europe. The project is expected to cost more than €5 billion.
China has also made investments in Greece, notably in its port infrastructure. With the acquisition of a controlling ownership in the port by the China Ocean Shipping Company (COSCO), the Port of Piraeus has become a significant center for Chinese maritime trade in the waters of the Mediterranean. This acquisition has resulted in considerable enhancements to port infrastructure, attracting increased maritime traffic and strengthening Greece's position as a regional logistics and transportation center. Greece roused as a strategic logistics hub during the Ukrainian War by sharing its ports with neighboring states in order to supply them with oil, LNG, food import, etc.
The Western Balkans region has seen an increase in Chinese investment, too. China's direct investments in the Western Balkans were expected to reach about €1.6 billion in 2020, according to the European Bank for Reconstruction and Development (EBRD). These investments have mainly aided the energy, transportation, and communications sectors, supporting regional economic growth and development.
While Chinese investments have offered much-needed assistance for Balkan infrastructure development, questions should be raised about the terms and circumstances of these investments. Some critics claim that specific initiatives are ambiguous and may burden recipient countries with unsustainable debt. The huge debt load linked with the Chinese-funded Hambantota Port project in Sri Lanka, for example, has aroused worries about the potential dangers of debt-trap diplomacy.
In order to address these issues, countries that receive funding must thoroughly evaluate the economic feasibility and long-term sustainability of Chinese-funded projects. Transparency, adherence to international standards, and extensive cost-benefit evaluations are critical in ensuring that these investments contribute to the Balkans' economic well-being while not imposing unreasonable financial obligations.
Influence and Diplomacy
Besides economic investments, the Chinese Communist Party is keen on diplomatic investments, too! One of the key diplomatic initiatives that China has pursued in the region is the establishment of the "16+1" platform. The platform brings together China and 16 Central and Eastern European nations, including Serbia, Albania, Bosnia & Herzegovina, and North Macedonia.
The "16+1" framework provides a venue for China and other nations to engage in political discourse, economic cooperation, and cultural exchanges. According to China Customs' statistics, China's trade volume with CEEC totaled $67.98 billion in 2017, a 15.9 percent increase compared to that of 2016.
However, because of its financial resources and readiness to participate in large-scale infrastructure projects, China has gained popularity with several Balkan countries. This led to concerns that China's influence may distract Balkan nations' focus and devotion away from EU integration aspirations since most of the countries supported by China are non-EU members. As a result, the EU must reconsider its engagement strategy in order to remain an appealing and competitive partner for Balkan nations.
Concerns have been expressed regarding the possible geopolitical implications of China's presence in strategically key ports such as Greece's Piraeus and Montenegro's Bar. China's participation in the building and operation of ports opens up chances for marine trade, naval cooperation, and possible military access. However, this has consequences for NATO's position in the region as well as Russia's Balkan ambitions. The emergence of a strong global power such as China has the potential to destabilize the present balance and complicate the dynamics among regional entities.
Both China and Russia share interests in countering Western influence in the region. They do, however, struggle for economic opportunities, political leverage, and regional influence as the Balkans may become a geopolitical battleground for China, Russia, the US, and the EU, thereby affecting regional stability and prosperity. This competition might take many forms but the most prominent will be the energy sector. China and Russia have both invested in Balkan energy infrastructure projects in order to obtain control of major energy assets and monopolize the regional energy supply. For example, Russian Gazprom covered more than 90 percent of Bulgaria’s gas supply until the country, along with Poland, refused to pay in rubles after the war in Ukraine.
China and Russia also vie for political leverage by forming alliances with Balkan countries and promoting their different geopolitical objectives.
An important point that should be pointed out is the growing influence of China in the Balkans and its effects on NATO and Western dominance in the area. China's strategic and political interests are served through financial incentives and dependencies on the Western Balkan states. This extends beyond the economic and industrial sectors, as Beijing has also established cooperation with political, media, educational, and cultural entities. The partnership between China and Serbia is particularly strong, reinforced after the accidental NATO airstrike on the Chinese embassy in Belgrade during the 1999 NATO Operation Allied Force. China has supported Serbia on the issue of Kosovo ever since, refusing to recognize Kosovo as an independent state and undermining its applications to international organizations like the United Nations and Interpol.
Researchers note that China has influence over Serbia's parliament and political parties, pressuring them to accommodate the needs of Chinese companies. This influence extends beyond Aleksandar Vucic's Serbian Progressive Party, the dominant party in Serbia, to other parties and political representatives. As a result, Serbia, like other countries in the region, does not have political relations with Taiwan. China also utilizes soft power instruments, such as university exchanges, Sinology programs, and cultural centers, to maintain its presence in the Western Balkans. However, these initiatives have faced criticism for censoring liberal ideas and controversial topics.
![A sign apparently paid for by Informer, a Serbian newspaper aligned with the government. The billboard reads: "Thanks Brother [Chinese President] Xi.", Credit: Djordje Kojadinovic/Reuters](https://static.wixstatic.com/media/13893a_ec5c460512c343eeb40100bb79873d6d~mv2.jpg/v1/fill/w_980,h_622,al_c,q_85,usm_0.66_1.00_0.01,enc_auto/13893a_ec5c460512c343eeb40100bb79873d6d~mv2.jpg)
In terms of media cooperation, the Xinhua News Agency collaborates with agencies in Albania, Bosnia and Herzegovina, North Macedonia, and Serbia, organizing exchange visits for journalists and providing free content. In Serbia, media cooperation is institutionalized through an agreement between the Serbian Ministry of Culture and China's State Council Information Office. These activities not only reduce critical views but also promote positive narratives about the Chinese government and its handling of the COVID-19 pandemic and medical assistance.
Also, since the disintegration of Yugoslavia, the Balkans have been a focus of Western close attention, with NATO playing a significant role in ensuring regional stability and security. However, China's expanding influence, particularly through investments in critical infrastructure such as ports and communications, has the potential to challenge Western influence and weaken NATO's position in the region. The acquisition of strategic assets by China, such as the Port of Piraeus in Greece, has prompted fears about China's potential access to crucial transportation and logistical centers in the Mediterranean, which might undermine NATO's capacity to project power in the region.
Furthermore, China's economic investments and diplomatic attempts provide the Balkan nations with an alternative source of support and development, thereby lessening their dependency on Western help and integration procedures. This dynamic complicates the EU's attempts to promote political and economic reform in the Balkans, and it has the potential to generate geopolitical splits within the area.
In terms of the United States, China's growing presence in the area may have an impact on US interests and influence, as well as its ties with regional actors. The US may see China's involvement in the Balkans as a risk to its own regional power and may respond by increasing its engagement and relationships with Balkan countries.
The complex relationship in the Balkans between China, Russia, and the US might generate a more multipolar dynamic, with conflicting interests and influence from many foreign parties. China and Russia have already spoken about breaking US hegemony and bringing the world back from unipolar world order to a multipolar one, where China and Russia balance the US and EU.
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